George of the bungle: Mr Osborne faces questions in emergency session (Image: PA)

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Chancellor George Osborne faced ridicule in the Commons as he desperately tried to shrug off Britain’s credit downgrade today.

Mr Osborne faced calls to resign from Labour MPs as he declared that the coveted AAA rating he made the key benchmark of economic success was just one test of the Government policy.

The Chancellor was hauled before Parliament as the pound dropped and Downing Street refused to rule out fresh downgrades in the wake of ratings agency Moody’s decision to strip the UK of AAA status.

Labour’s Ed Balls branded Mr Osborne the “down-graded Chancellor”, telling him to “get out of denial” and produce get a new plan for jobs and growth or see someone else running the Treasury.

Families face the threat of higher food and energy bills as currency traders sold Sterling when the markets reopened after Friday’s downgrade.

The pound hit a 17 month low against the euro of 1.13 and remained at a 31-month low against the dollar.

Mr Osborne refused to answer questions about what the slide would mean for Britons’ living standards.

He defiantly claimed that Moody’s warning was an endorsement of his decision to slash Government spending, even though they agency blamed a lack of economic growth.

The shameless Tory said: “Their message to this Government and this Parliament is explicit: the UK’s rating could be downgraded further if there is a reduced commitment to fiscal consolidation.”

Shadow Chancellor Ed Balls said that his stance was “utterly baffling and illogical – he’s just making it up as he goes along”.

“He has gone in a weekend from saying he must stick to his plan to avoid a downgrade, to saying the downgrade is now the reason he must stick to his plan.

“He used to say a downgrade would be a disaster, today he says this downgrade doesn’t matter – but he is still warning a further downgrade really would be a disaster.”

Mr Balls added: “Does he not see that his first duty is not to their own political pride, but the national economic interest and the families and businesses of Britain?”

Former Business minister Pat McFadden taunted the Chancellor by throwing his words in Opposition back in his face.

“If you did not want this to be the test, you should not have set it up to be the test.

"Can I ask you, do you agree with yourself that for the UK to lose its AAA rating would be a humiliation?”

Veteran Labour attack dog Denis Skinner said: “If you had been a football manager you would have been out on your neck already.

"People think you are not fit to deliver the next budget. Why don’t you get out?”

John Mann, a Labour member of the Commons Treasury select committee, said that the “honourable course” for Mr Osborne was to go to the next Cabinet meeting and say: “I’m going outside and I may be some time.”

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Persevering with Plan A for Austerity is ostrich politics, write Kevin Maguire

GEORGE Osborne hasn’t been so humiliated since Old Etonians would call him “oik” because his posh school cost a couple of grand less than their snobby college.

Gone is the swagger of the Bullingdon Boy in wing collar and Edwardian tailcoat, hands on hips and nose in the air, as if he owned the world.

Share prices in the Chancellor are falling fast in Westminster.

His value will suffer again in April when millionaires get a tax cut as ordinary families are clobbered by a bedroom tax will be the final nail in the lie we’re all in this together.

Persevering with a discredited Plan A for Austerity is ostrich politics.

The country needs a Plan B for growth. The answer is boosting investment, raising living standards and slowing cuts.

The unloved Chancer of the Exchequer is the economy’s single biggest problem.